Brexit Britain in Meltdown Mode

Is Brexit dead in the water?

Summertime London is lively and festive, but the locals have less spring in their step than the tourists.Theresa May called last week’s election to get a mandate for her brand of ‘hard Brexit.’ Planning to play tough with Europe, she said that if she didn’t get what she wanted, she would take her ball and go home. ‘No deal is better than a bad deal’ she declared defiantly. Ludicrous though the claim may have been, shire Tories lapped it up.

In truth, there was no evidence to suggest that the slender majority who had voted for Brexit in last year’s referendum wanted to crash out of Europe, bar the cost. But those who questioned Mrs. May’s equation of Brexit to hard Brexit were cowed by her bullying, reminded constantly that anything less than support for her position revealed a closet desire to reverse the will of the people.

Then overnight, everything changed. Mrs. May’s hubris led her to believe she could coast to an enlarged majority, gaining the strong backing she needed to browbeat her European partners, merely by calling an election and turning up. Voters thought otherwise. In consequence, the many MPs in Mrs May’s Tory Party who reject a hard Brexit no longer feel intimidated. On the contrary, were the Prime Minister to forge ahead with her uncompromising plans, they would now feel both a right and duty to oppose her for doing just what she warneed against them: ignoring the will of the people.

In principle, Brexit must go ahead in some form. Given that both the Tories and Labour promised to do so, an overwhelming majority of the British public supported parties that said they would implement the referendum result. In practice, though, things just got really messy. Should Mrs May cobble together a coalition with the Democratic Unionists, she’ll gain a majority in the House of Commons of less than ten. Both the Eurosceptic and Europhile factions in her party are bigger than that. If she delivers anything less than a hard Brexit, the Eurosceptics will revolt. If she tries to please them, the Europhiles will do likewise.

Put simply, she can’t assemble a majority within her own party for any particular model of Brexit. That’s why government ministers have begun hinting they would like to talk with Labour politicians to see if they can get support for Brexit on the other side of the aisle. In principle, Labour could go along with this. But once again, in practice, it’s very complicated. Even though Labour’s manifesto supported a soft Brexit, it’s also pretty clear that for most voters – and certainly most Labour voters – Brexit was a secondary issue in the election. And the surge in first-time voters who powered Labour to an increase in its ranks tend to oppose Brexit.

Thus, Labour would demand its pound of flesh for any support it might give to a soft Brexit. In consequence, Britain would head to Brussels with a fragile coalition that would very likely splinter once the demands across the table toughened. Why wouldn’t they? Having spent the last year listening to Mrs May and her cabinet deride them as thugs and goons, EU governments are not likely in a mood to ease her discomfiture with anything more than a Brexit in name only.

So why not go to an election, in the hopes a new government has a strong mandate to break this logjam? Easier said than done. Every day that passes, the new uncertainty that hangs over Britain’s long-term future is giving corporate CEOs pause in their own decision-making. That investment to expand a plant now at capacity? Hold off making it until you know your access to export markets remains assured. And with everyone acting more cautiously, the British economy will slow.

It’s already done so dramatically. Britain, which finished last year a star performer in the G7, is now the slowest-growing economy of the lot. Meanwhile the collapse of the pound has driven prices higher than wage gains, squeezing real living standards for most people. Every day that passes in which people’s economic conditions worsen, another few more start hesitating about Brexit. Some Tories thus fear that were they to go back to the polls, Labour might defeat them, as sentiment turns against the ruling party. So they will do everything to avoid an election for now. That prolongs the uncertainty, which will further worsen the economic outlook, further prolonging the desire to avoid an election. Britain risks a downward spiral.

A year ago, I predicted that Britain’s ‘leave’ vote in the referendum would initiate such a spiral, gradually weakening support for the result. That prediction presumed a best-case scenario in the country’s politics. I hadn’t reckoned with the spectacularly inept performance of Mrs May’s ministry. Add that to the mix, and Britain may be in for a prolonged slump. If you’re one for schadenfreude, it’s a great time to be here.

Image: Shoppers in Oxford Circus


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